ADB loans won’t reform power

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SOURCEBusiness Recorder
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Pakistan has signed another loan with the Asian Development Bank (ADB), with an aim to reform the energy sector. Like all other loans, the signing was portrayed as if the energy sector has actually been reformed. The first tranche of the billion dollar loan has been approved, and the ball will soon be rolling.

The loan or the ‘project’ as the donors like to call it – is called “Pakistan: Energy Sector Reforms and Financial Sustainability Program.” A billion dollar loan to transform and overhaul the ailing energy sector in a span of five years, sounds just about worth it. Only that it sounds familiar. A “project” titled, “Pakistan: Sustainable Energy Sector Reform Program,” was earlier carried out by the ADB in 2014, which closed in 2017. The size of the loan ran into more than a billion dollars too.

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The ADB should be given full marks for consistency, for keeping the focus on the program around sustainability, which is also an admission that the previous program did not quite achieve what it aspired. Another matter that the ADB herself, graded the outcome rather positively, upon conclusion of the program with words such, “reliability, sustainability, and affordability of the energy system improved’.

Now everyone knows the affordable part story. Had that been the case, tariffs would not have needed to go up quarter after quarter, without ever being enough – and the costs would not be touching the current highs. Also, the fact that the new program is also aimed at achieving sustainability, it is safe to assume the ADB must have had a rethink on its own grading of its own program. Surely, sustainability at the ADB is not meant to last for two years. But don’t take anything away for being innovative this time around, as this is not your everyday sustainability the ADB loan will almost ensure to Pakistan’s energy sector. It is the ‘financial’ sustainability.

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The merits of the program will be discussed further in this space. But what must not be forgotten is that the energy sector reform needs much more than a few donor backed programs. Bigger programs in the past that were concluded did not find the desired results. This is not to say that this one will not. But the fact that the donors will invariably come up with old wine in a new bottle, after having declared success earlier – should not be lost on anyone.

(This news/article originally appeared in Business Recorder on December 10th, 2019)

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